USDA has completed its rulemaking on an “undue preference” rule related to meat packers' business relationship with the livestock growers. The final rule, published in Friday's Federal Register, sets criteria for USDA to consider when determining whether an undue or unreasonable preference or advantage has been given to a poultry or livestock grower by any meatpacker, contractor or dealer as described under Section 202(b) of the Packers and Stockyards Act (P&SA).
The rule will become effective 30 days from Friday.
Under the P&SA, meatpackers, contractors or live poultry dealers are barred from making or giving “any undue or unreasonable preference or advantage to any particular person or locality in any respect.” USDA is responsible for determining whether actions constitute a violation of the P&SA. The final rule, which includes some changes from the proposed rule published in January, defines unfair treatment of producers as giving any preference or advantage that cannot be justified based on cost savings, meeting a competitor's prices, matching a competitor's terms or as a reasonable business decision.
Besides those four criteria, the rule allows the USDA Secretary to “take other factors into consideration as appropriate on a case-by-case basis.” Only modest changes to the proposed rule were made in the final version. The issue has been a long-running one dating back to the Obama administration.